The plant was shut down for a nearly a year for repairs after a July 2010 annual routine test by Covanta found levels of dioxin -- a carcinogen -- were 250 percent beyond safety limits.

Exposure to low levels of dioxins over long periods, or high level exposures at sensitive times, might also result in reproductive or developmental effects, according to the U.S. Environmental Protection Agency.

Located about 15 miles north of New Haven, the Wallingford plant burns trash from about 200,000 people.

"As this was the second violation of its kind in the past few years, there is no margin for error here -- Covanta must get it right," DEEP Commissioner Daniel Esty said. In 2009, the firm paid $355,000 to the state because of unsafe dioxin emissions from its Wallingford and Hartford plants.

The Wallingford plant resumed operation in July after dioxins tested below safety limits, Covanta spokesman James Regan said. The company also must conduct more periodic tests on dioxin emissions.

Covanta runs seven trash-burning power plants in New York and wants the state Public Service Commission to add trash burning to the list of renewable energy technologies. The change would permit Covanta to get state subsidies under the Renewable Portfolio Standard available to developers of wind, solar, biomass and landfill gas electrical-generation projects.

The change is opposed by environmental groups as well as wind and solar developers. It is supported by business and elected officials from the areas around the plants. The PSC is taking public comments through Thursday, Aug. 18.

"These were huge violations of the state pollution standards. And who knows how long they had been going on," said Bill Cooke, director of governmental relations for the Long Island-based Citizens Campaign for the Environment.

He said the funds should be limited to green renewable projects.

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The renewable fund spends about $250 million a year through a residential power surcharge that averages about 25 cents a month per utility bill.

Covanta operates plants in Dutchess County; in Nassau and Suffolk counties on Long Island; in Onondaga County in central New York; and in Niagara County in western New York. Covanta operates a total of 44 trash-to-energy facilities nationwide, including four in Connecticut.